Tuesday Morning Cheat Sheet: 3 Stories Moving Markets

Markets were mixed in Asia on Tuesday. Japan’s Nikkei index fell 1.45 percent after the nation’s central bank announced that it would leave its monetary policy unchanged, despite some fears about rising borrowing costs. The yen strengthened to 96.9150 to the dollar. The Hang Seng fell 1.20 percent on the news, while the S&P/ASX 200 climbed 0.41 percent, its first gain in three days.

Markets were mired in red territory in mid-day trading in Europe. Investors seem to be increasingly concerned about inflated equity prices, and may be trying to exit risky positions while they can. Germany’s DAX was off 1.72 percent, London’s FTSE 100 was off 1.62 percent, and the Stoxx 50 index was off 2.08 percent.

1) Bank of Japan: The move was expected, but it still weighed heavily on markets. The Bank of Japan announced late Monday that it will leave its ultra-loose monetary policy untouched, suggesting that stabilizing bond prices and improving overall economic output are evidence of the policy’s effectiveness. Rising bond yields have caused some concerns, particularly in the nation’s housing sector, but Governor Haruhiko Kuroda tried to ease concerns by saying that he will act if borrowing costs spike.

The BoJ commented: “With regard to the outlook, Japan’s economy is expected to return to a moderate recovery path, mainly against the background that domestic demand increases its resilience due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up, albeit moderately. The year-on-year rate of change in the CPI is likely to gradually turn positive.”